The State Bank of India (SBI) report says that the planned spending on private capital projects for the fiscal year 2026 is much less than what was planned for 2025, and it might go down even more because of the effect of US tariffs.
The report said that even though government spending has been helping the economy grow, it now needs more help from the private sector to keep the growth going. It said, "The data shows that the planned spending for FY26 is much less than what was planned for FY25."
The report also said that private investors need to 'take the lead now,' because not enough private money is coming in, which is a big worry for long-term growth. A survey of 2,170 companies done in April 2025 in areas like agriculture, manufacturing, IT, and others showed that SBI found the planned spending for the next financial year is lower than last year's. Also, there is a chance this spending could go down even more because of difficulties in international trade.
The report shows that the real private capital expenditure was ₹3.9 lakh crore in 2021-22, increased to ₹5.7 lakh crore in 2022-23, and then dropped quickly to ₹4.2 lakh crore in 2023-24. In recent years, private capital expenditure has remained around ₹4.9 to 6.6 lakh crore. The planned investment for the financial year 2026 is set at ₹6.6 lakh crore, but the report noted that this amount is still not enough when compared to what's needed for faster economic growth.
The report said that although government spending has helped the economy grow, private businesses haven't invested as much to support or join in that growth. The highest level of government spending on capital projects in relation to the economy is 1.17, showing that public funds have helped boost economic activity.
However, the lack of active private investment is holding things back, which makes it harder for government projects to have a bigger impact. The somewhat serious flexibility at 1.17 suggests in the Indian situation that government spending on capital has helped the economy reach a higher growth path.
The report said that the lack of strong private investment is a major limit on raising the multiplier even more. The report said that because public investment has already done most of the work in recent years, future growth can only continue if the private sector becomes more involved.
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